GameStop X PSA Merger - Solving the Biggest Problem with Collectibles Market
Current State of Collectibles Market: Collectibles are seen as a quasi-investment.
- They’re comparable to bonds in terms of typical investment return
- Unlike bonds, they have higher potential to drop precipitously in value
- For the average collector, it’s a high-risk environment for the sake of modest returns
- The “enjoyment” quotient makes up for the risk potential in many cases (nostalgia, etc.)
Lack of bids/asks is the main culprit for the price drop risks.
- Many, many collectibles vs. relatively few buyers/sellers
- High transaction costs to facilitate/validate trades, which further suppresses market entrants
In other words, the biggest impediment to making collectibles better investment vehicles is lack of market participants and high transaction costs.
GameStop and PSA could disrupt the collectibles industry by facilitating a cheap, fast, and hyper-expanded bid/ask environment.
But how?
Simply put:
GameStop creates a "Collector's" hub that facilitates the trading of graded and vaulted physical collectibles by routing ownership through a blockchain.
Less simply put:
- GameStop provides a marketplace interface for entrants to sign-on and trade rights to collectibles (re: NFT marketplace refresh).
- PSA/GameStop (merged?) houses vaulted cards that are assigned NFTs (or NF-keys, if you will) that are dropped into wallets assigned to their owners.
- Now that we have NFTs with actual intrinsic value (access to the vault or vaults), the blockchain can do what it was meant to do - be a ledger.
What does this mean?
As far as the company's footprint goes, only three things become necessary.
- Warehousing/office space for admin, vaults, and grading
- Website/Mobile
- Strategically placed "consulates" where collectibles can be presented for grading/vaulting (re: existing storefronts, likely far fewer than exist today). Else, they can be mailed in.
Why does blockchain technology help this?
The benefit of blockchain is that it's a distributed (re: trustworthy) third party. GameStop has no need to play intermediary to the transactions, only when collectibles are added or are recalled from the vaults (taken off-exchange, so to speak), which incurs fees. GameStop only needs to do three things:
- Be a billboard for its graded inventory (valuations, especially)
- Generate NFTs when vault submissions are made
- Recognize valid NFTs when vault recalls are made
Suddenly, NFTs with intrinsic value are showing up on the (likely) Ethereum blockchain and other marketplaces. Increasing visibility and potential market participants.
Suddenly, you can buy the rights to real-life collectibles without typically high auction fees and transaction costs (since there's no need to move anything physically, unless you really want to take it off-exchange).
In other words, collectible ownership suddenly becomes a more viable investment vehicle, leading to even more market participation.
HERE'S THE INTERESTING PART:
Each NFT comes as part of a smart contract, which can execute specific commands like, say, any time a transaction occurs, X% of the transaction cost in Ethereum gets routed to GameStop. If an NFT for rights to a vaulted Barry Bonds card gets traded on OpenSea, for example, a portion of that trade will go to GameStop no matter how many times it gets traded.
One potential caveat to this is that once an NFT becomes defunct (maybe the collectible was destroyed or taken off-exchange permanently), there's no way to stop the original NFT from being traded in perpetuity. There could be legal ramifications there - but it could also simply mean GameStop receives revenue for free since people still may find enjoyment in buying the defunct NFT. Who knows.
OR OR OR
Or maybe something completely different happens altogether. I'm just excited because RC moved his shares like they're about to do a merger.